Judge Is Assailed Over Holocaust Fund

By WILLIAM GLABERSON

Published: April 30, 2004

The raw emotions and memories brought to life by a 1998 settlement of a lawsuit against Swiss banks for their handling of Nazi-era accounts filled a Brooklyn courtroom yesterday, as a federal judge heard what one witness described as a ''dog-eat-dog'' battle between Holocaust survivors over how to distribute what could be hundreds of millions of dollars.

It was Thane Rosenbaum, a son of Holocaust survivors, who supplied the description in his testimony, capturing the mood in the crowded courtroom as Israelis argued for a bigger share than Jews in the former Soviet Union, American survivors said they were being treated unfairly and an official of an aid group described a Gypsy survivor of the Nazis who needed boots instead of rags to wear in the snow.

More than $500 million of the $1.25 billion in the Swiss bank settlement has already been allocated. The debate yesterday was provoked by Judge Edward R. Korman's decision governing about $200 million that has been allocated under parts of the settlement for humanitarian aid. Judge Korman has ruled that such funds should be used for the ''neediest survivors.'' He found that the grinding poverty in the former Soviet Union was so severe that he allocated 75 percent of the humanitarian funds available for Jewish survivors to that area. Four percent is to be used for impoverished survivors in the United States, with the balance going to Israel and elsewhere in the world.

The critics -- who included demonstrators outside the courthouse -- said they believed that approach was unfair for many reasons, and asserted that studies have overstated the number of Jewish survivors in the former Soviet Union.

Paul S. Berger, a lawyer lodging complaints on behalf of the Israeli government, told Judge Korman that many survivors who have watched the distribution so far ''have a sense that justice hasn't been done.''

Such feelings of indignation sparked applause and jeers inside the courtroom, and angry comments by the judge, who dismissed as ''phony arguments'' claims that he has unfairly sent tens of millions of settlement money to impoverished Jews in countries that were once behind the Iron Curtain, while ignoring the poverty of survivors elsewhere.

Judge Korman scheduled the hearing after a special master said last year that, because of lack of cooperation from the Swiss banks, it might not be possible to satisfy the main goal of the suit -- to find depositors with valid claims to $800 million set aside for people whose Swiss banks accounts were lost or looted during the Holocaust.

The suit claimed that the banks had helped eased the transfer of Holocaust victims' accounts to Nazi authorities, misled the account holders' survivors and routinely destroyed bank records for decades.

Only $154 million has been paid to account holders. The hearing was held to air arguments supporting scores of proposals from all over the world about what to do with the balance, if any, of the $800 million that is not claimed. Judge Korman apologized yesterday for the slow process, but said it was still too soon to decide that more people with valid claims to lost accounts could not be found. He said he would not declare any of the $800 million to be used for other programs soon.

The hearing often veered away from the proposals into emotional demands, painful personal histories and angry exchanges over the approach Judge Korman has taken so far. ''I have no means right now to live,'' said one survivor, Esther Mayer, who now lives in Borough Park, Brooklyn.

Another survivor now living in Brooklyn, Malka Moskovitz, told the judge that being a survivor in comparatively comfortable America hardly erased the anguish. She described seeing her parents pushed into gas chambers and said, even now, the memories mean that the concentration camps are not fully in the past. ''I didn't survive the German camps,'' she said, ''I am still there. I live at Auschwitz.''

Mr. Rosenbaum, who is a law professor at Fordham University School of Law, drew applause when he argued that Judge Korman was, in effect, giving money to people who survived the Holocaust by escaping to the Soviet Union.

He said the beneficiaries of much of the aid so far were not entitled to the money, which, he said, was obtained to compensate direct victims, like the families of bank depositors killed by the Nazis and survivors of the concentration camps.

He said Judge Korman's approach was not only ''an affront to the living, but also a desecration of many of the dead.'' The judge heatedly answered that American survivors have received billions of dollars from reparations programs since World War II, as well as 30 percent of the money paid out of the suit settlement.

David Schaecter, the president of an American group, Holocaust Survivors Foundation USA, got into a shouting match with the judge, who has often ruled against the group.

''I came here feeling I am a loser regardless,'' he said, asserting that the judge has ignored the suffering of 30,000 American survivors.

Judge Korman shot back that the claims of Mr. Schaecter's group were flawed in part because the group did not account for the fact that social services networks in the Untied States are strong, while nearly nonexistent in the former Soviet Union.

''You can go out and hold demonstrations in the street,'' Judge Korman said, ''but they're not a substitute for hard, empirical evidence.''

Mr. Schaecter answered: ''As a survivor, I have the right to stand here and say I reject your argument.''

Photo: Among the demonstrators outside a Brooklyn courthouse yesterday to protest how a judge has allocated money from a Swiss bank settlement, was a woman holding a scrapbook of family photos and diary passages. (Photo by Tyler Hicks/The New York Times)